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The reform of public service reform

First published in Renewal volume 13, number 2/3 (2005), pp. 41-8

A resilient, self-confident social democracy has a public realm in which market values and relationships don't apply.

The problems faced by public services in Britain are not intractable. They are neither caused by the lack of public support for funding public services, nor by service failure. Opinion polls register high levels of support; services are measurably improving; the additional investment made so far in public services has achieved results: some crime has reduced, health and education is improving, and investment in public buildings has reversed a very visible physical decline in the public realm. But so far results have been small in scale compared both with the scale of the social inequality that public services are supposed to address, and with the public ambition that elected Labour in 1997.

The direction that policy may now be going to take – an unqualified support for greater private sector engagement while continuing the pressure on ‘delivery’ – fails to address underlying problems. This is not a criticism that stems from a backward looking opposition to ‘modernisation’ – a broad consensus accepts that public services must adapt in response to changing lifestyles, that there is a role for the private sector, and that government should ensure additional funding translates into additional public value. But there is more than one way to modernise. What is missing is the debate about alternatives.

The problem is not with government intentions: ministers, advisers and civil servants continue to mean well towards public services. But New Labour’s assumptions – about what public services are for, how they work and how they can be controlled – are accumulating unintended consequences.

After eight years of fiddling around with public services, we badly need some proper social theory. Geoff Mulgan recently wrote a thoughtful piece about the need for strategy, and the attempt in government to fend off short-termism by creating a longer-term strategic capacity (Mulgan, 2005). This has been useful, but still creates isolated pockets of long-term thinking among a government machine fixated on the next four years. Government currently is strong on knowledge – which translates primarily into fast data feedback about current priorities and preoccupations – and weak on history and theory. Heseltine’s reforms of the civil service stripped out much of the ‘collective memory’. The speed with which civil servants move around, let alone advisers, mean that after two years, those responsible for an initiative are unlikely to understand properly why it was launched – let alone understand the underlying patterns of public policy over the past three decades. Government – and increasingly, now, the media – has little concept of trend – it is as if the graph is constantly cut off just above and just below today’s data.

The slogan ‘what matters is what works’ has served New Labour ill, since it has undermined the importance of history and of analysis. It implies that the problems government faces are managerial – when in fact they are almost all political. Problems are emerging in three areas: funding for public services, delivery systems and governance. Policy failure can’t be explained simply in relation to any one of these issues; we need to examine the interaction of policy in all three areas to disentangle the current confusion.

Funding for public services

The investment in the public services has been ‘oversold’. Given the extent of decline in public investment in the Thatcher and Major years, it is not surprising that a relatively modest rate of re-investment in a few key services has not produced, in a short timescale, dramatic visible improvements. By continuing with the downward trend of spending in the Tories’ plans for 1997–8 and 1998–9, spending continued to decline before it began a slow rise and is now only just matching spending of the Major years, in real terms still a considerable fall below the spending of past Labour governments.

The slow start to reinvestment miscalculated the time it takes to train and recruit professionals, so that problems of recruitment – not only in hospitals but in schools, social work, youth work, even housing offices – have slowed down the rate of visible improvement. In many areas of public service, spending is not increasing, it is continuing to decline – to pay for the investment in government priorities, local authorities have been forced to cut spending on libraries, social care, the environment and youth services.

Even where investment has taken place, it has often been barely enough to cover the necessary pay increases to ensure recruitment and retention, investment in collapsing infrastructure, and simply catching up with good practice. In some cases it is hard to tell whether initiatives that soak up staff and resources such as NHS Direct or ‘Quality Protects’ are a response to problems of recruitment and retention in mainstream services, or a contributory factor. In any case, good as these initiatives are, they contribute to the reduction of ‘new money’ at the front line to a trickle. As the economy slows we must expect that even before we see the full benefit of additional funding, that additional funding will be reversed. The tussles over council tax revaluation this year raises again the fundamental political question about the level of social investment we want as a society, and our willingness to fund it through taxation; but it raises also the issue of whether the question should be asked and answered purely in Westminster.

Delivery

The second Blair term was obsessed with delivery. That ought to be a good thing, since it should ensure that public spending translates into better services. But for a government wanting to be ‘modern’ the assumptions made about how government achieves things have been remarkably old fashioned; the state is seen, as Harold Wilson once saw it, as ‘a car to be driven’.

Of course, governments with urgent short-term agendas want to believe that there is a lever they can pull which will ‘make things happen’. In response, the Prime Minister’s Delivery Unit has worked hard to invent something that resembles the performance management system in a large company: the cabinet holding the minister and permanent secretary of each department to account for ‘delivery’ of key targets; who in turn hold senior civil servants to account for delivery; who in turn hold civil servants in the region to account for delivery; who in turn hold local government, local police forces, local hospitals etc to account for ‘delivery’ – the hip bone’s connected to the thigh bone – and so on. The diagrams resemble the good old corporate management diagrams from 1960s management training. In theory, the prime minister can issue an instruction, set a target, and pull the lever. But if these levers are not, in reality, connected – if civil servants have neither the tools, the resources, the power, nor the understanding to achieve these things – the result is an elaborate fantasy, the responses potentially random, and the ‘intervention’ that follows leads to unexpected problems.

Local organisations are faced with competing imperatives and pressures; partnerships are overloaded and pushed off course; local priorities with democratic support are distorted by national targets; outcome targets are determined that are neither resourced nor properly understood; local innovation and creativity is stifled; key staff at local level are demotivated, feeding into problems of recruitment and retention; the centre becomes caught in a hopeless attempt to ‘understand everything’ in order to issue the right orders, sucking up talent from the front line, which feeds back into recruitment and retention problems, which affect performance. Brendan Martin points out that in New Zealand, where a similar approach to public service reform was tried, the same problems of over-control at the centre and the squeezing out of innovation have occurred. He quotes Alan Schick, saying in very measured terms of the New Zealand experiment that it ‘may diminish public-regarding values’, weaken ‘collective interests’ and ‘undermine joined up government’ (Martin, 2004).

Jake Chapman in his work on systems failure (2002), Peter Senge (1992) and British consultants like John Seddon use whole systems analysis to try and understand why numerous attempts to ‘reform’ public services often simply intensify the problems. Systems thinking is far more helpful than linear, rational thinking in analysing public services. But we must beware of borrowing too many concepts from biology or physics; since human systems are not closed, feedback loops are not inevitable – purposive human action is always capable of understanding what is happening and breaking out. We are thinking, conscious beings and, as a result, politics is never far away.

We have an impoverished view of the range of potential institutions and organisations that could be developed to provide public services – preoccupied with large conventional capitalist companies rather than with smaller, more social independent models. Choice cannot simply be limited to choice of product. Even in the commercial sector, consumers are concerned about the process of production. Jamie Oliver recently talked about supporting ‘social business versus commercial business’ in the Guardian (4 June 2005). A concern with values has become mainstream, and yet within public services, where the contact between user and provider is part of the all-important interaction between the state and citizen, there is little support for alternatives to market and commercial ethos.

The ‘third sector’ attracted attention briefly in the early years of the first New Labour government and organisations such as housing associations continue to play a vital role in achieving social goals, yet are in danger of being flattened by government policies that favour the private sector. Voluntary organisations, crucial allies in creating a vibrant civil society, tend to be treated simply as cheap providers, commissioned and controlled as if they were simply agents of government, without an understanding of the limits and boundaries of state control.

The roles and accountabilities of the private sector in the public domain go unexamined. We don’t now have a clear shared understanding of the obligations that should be expected of private sector organisations, or how they fit within wider accountability arrangements. What is the role of local, regional and central government in regulating and managing markets for public services? What are the provisions for recovery when private sector organisations fail? What do we expect of private sector organisations offering services in the public sector? What values should they have? Is it acceptable for all risk to be transferred to the state?

The absence of trust in public agencies, combined with an ‘in principle’ belief in the efficacy of the market, has led to the over-regulation of the public sector, while the accountabilities of the private sector go unexplored. We need urgently to explore ways of holding providers of public services to account in ways that neither mimic the market, nor construct bureaucratic hierarchies.

Governance

The ‘public’ part of public services doesn’t require that they are always provided by public agencies; we already have a thoroughly mixed economy. The most important collective task is deciding the scope, balance and nature of public services, and how much we are willing to pay for them. These decisions are getting further and further away from us. And yet, as society becomes more diverse, as politicians are elected with smaller and smaller percentages of the vote, central government no longer has the legitimacy, or the knowledge, to make those decisions on behalf of us all. We live now in a peculiar hybrid between representative and participatory democracy – and representatives are no longer entirely trusted to decide on our behalf.

This is not simply an issue of wanting more consumer ‘choice’. We are never simply consumers; we are, as citizens, both the ‘authorisers’ of political decisions and the ‘co-producers’ of social benefits. A top down, centralised approach to policy delivery removes the possibility of tailoring solutions to local needs, and reduces public engagement to a series of highly staged ‘listening’ events.

The decisions to be made are complex, and involve difficult trade-offs between conflicting outcomes. They are always, more or less explicitly, political. Powerful interests try to skew these decisions; different communities would choose differently. With limited spending some things can’t happen. Some public services have to get better at the expense of others. There are winners and losers. Priorities have to be set. This can only sensibly be done at local or at sub-regional level, where the precise needs, geography and history – and the practical resources available – can be taken into account.

The IPPR working party on citizen engagement (Rogers, 2004) found that public interest in politics and in public services was alive and well – the public had simply lost interest in the current activities of political parties. People want to be engaged in making decisions about public services, but only when they feel able to influence what happens; they want the levels of government that they access to be in control. Talk about electing police authorities or foundation hospital boards, even neighbourhood committees, when fragmented and isolated local providers have no real power or leverage only increases frustration. It is important to create sufficient leverage within the reach of citizens to deploy resources and shape local outcomes.

This doesn’t mean endless public meetings or committees. We can be more modern than that. It doesn’t mean crushing the population with dull civic duties. But it does mean using the internet, interactive technologies, the media and the political process to develop real dialogue – it is a scandal that throughout the election the media and political parties conspired to ‘dumb down’ the debate about public services. It requires local organisations to connect around a set of solutions, which are locally legitimated, and to which they are held accountable. It does mean recognising and valuing the contribution made by councillors, school governors, public board members and panel contributors, and making it an expectation that we all, at some stage in our lives, might serve briefly, on behalf of our communities. For much of the time, the minimum level of public engagement is vigilance, and the right to be properly informed. But there are moments, and situations, where deliberative approaches are needed to solve complex problems. It is not simply in other countries that deliberative experiments have been successful – but we fail to learn from the lessons accumulating in Britain.

To achieve many of the outcomes government wants to see, the relationship between government and the public has to change. Many of the new priorities – ‘respect’, an end to ‘binge drinking’, ‘recycling’, ‘improved public health’ – cannot be achieved by a smart government delivery machine; they require changes in behaviour from the public. This means not simply considering how to deliver using public or even private resources, but how to access the ‘free’ resources of public energy, engagement and action. In most cases the resources available in civil society to solve problems are far greater than the limited resources local or national government can release. How will we increase recycling? By a poster campaign? Television advertisements? Fines? More bottlebanks? More collections? It would take a far better dialogue than the one we have now to know. Much of this is about mind-set – commissioners and providers testing their ideas against citizen lifestyles and preferences, so that scarce public resources can be used to support the effective use of community resources – treating the public as full partners in planning and designing services.

Again, this is not a plea for more committees. Between the market view of choice and the bureaucratic imposition of standard services opens up a vast, untapped opportunity for dialogue; as the saying goes, we don’t want choice, we want what we want. We want services tailored to our own needs; and to achieve these we need not only modern, flexible, individualised delivery systems, but an interaction between provider and user to design a personal service – we need the ‘reflexive practitioners’ that Donald Schon talked about (Schon, 1983).

It is that combination of individually crafted services and integrated delivery systems that needs to replace current departmental silos. We cannot avoid complexity in service delivery, but we can, at local level, align delivery systems and begin to wire together local solutions. There is space within those solutions for public, private, not-for-profit and voluntary providers all to play a role – but there is a need for strong enough governance to hold the ring, and to legitimate the choices and trade-offs that are being made. As citizens it doesn’t help us to hold each powerless agency to account – we need to be able to hold the ‘whole system’ to account for the balancing decisions being made.

A way forward?

The most vibrant parts of government now are some of Britain’s best local authorities – confident counties like Kent and ambitious boroughs and cities like Lewisham and Liverpool. Local councils are moving from just providing services to leading the community – using ‘local strategic partnerships’ to make links between public agencies, business and the voluntary sector, and working out the priorities for each town or county. And buried in Labour’s manifesto is a proposal that might, just, offer a way forward.

‘Local area agreements’ – currently still in pilot phase – offer scope to create horizontal ‘contracts’ between public agencies at local level and to free local agencies from too much central control, to move resources between agencies to achieve local outcomes, and to radically redesign delivery systems. The agreements are based on a dialogue between local partnerships and government, striking a ‘deal’ about the outcomes to be achieved, and the freedoms and flexibilities needed to achieve them. Complex funding streams will be pooled, bureaucratic controls will be lifted. It could all dissolve to nothing – defeated by bureaucracies and impatient politicians on all sides – but there is a powerful prize if ministers and civil servants can be persuaded to be radical.

Government could abandon the command and control systems of a 1960s corporation and create instead a modern governance network, replacing process control by feedback and dialogue. Local authorities, local health organisations, police services, schools, the voluntary sector and local businesses could be freed to work in local partnerships towards agreed goals. They could collectively consult local communities, and contract with each other to deliver services through partnerships that were held to account by local populations. Radical thinking could lead to the transfer of national services to local providers, streamlining building use and access; for example merging education and health working, or social services and probation; redesigning services around user lifestyles rather than government departments.

A network approach would change thinking about how to achieve ‘delivery’ and thinking about the role and size of civil service. Instead of the minor Gershon changes we could be looking at a radical transfer of resources from the centre to the front line. The civil service need no longer attempt to become a vast ‘delivery’ machine, or a paper-writing bureaucracy – instead a network of conversations between the centre, regions and localities would transmit learning about what was happening on the ground. If government systems were truly open advice could come directly from academics, practitioners, community leaders and professionals as well as political advisers and civil service specialists. Instead of cumbersome guidance, learning from good practice can be shared by practitioners meeting face to face. The centre would still want to check for value for money; there would still have to be consequences for poor performance; a process such as comprehensive performance assessment could continue, transparent, shared, whereby access to data would reveal problems in delivery; challenge and dialogue could replace rigid processes. All that would be needed at the centre would be a few very clever people, who were able to support a political understanding of what was happening in the field, and design a policy framework to steer overall direction.

If the civil service developed longer-term cross-boundary policy teams, linked to the delivery of outcomes over the lifetime of a parliament, duplication would reduce and collective memory and experience would build; if secondments and exchanges between centre and locality become even more common, understanding of problems could at last be shared. If the civil service ceased to be a separate and protected organisation – if we created a common entry level for local, regional and central government, with equivalent prestige given to running a great city as to running a government department – we could change the invisible hierarchy between localities and the centre.

New governance arrangements need to evolve, rather than be simply imposed. In the medium term, this will mean a new constitutional settlement; to reach this point, however, we need radical experimentation, and vigorous political and public debate. Devolution of power from the centre should continue, together with control over resources and effective leverage to make things happen. This needs to be matched with devolution through regional and local government to neighbourhoods and localities, and with the spread of more open, more deliberative approaches to setting local priorities and negotiating solutions to local problems. Political parties, government institutions and stuffy old fashioned consultation arrangements all need to change. We need more innovative and braver government policy, willing to look beyond control freakery to longer-term, more innovative solutions.

Within a network system, there is a place for the private sector, but for the private sector as creative partners, alongside other voluntary and public sector providers, not able to predetermine a direction for public services that serves only commercial interests. That’s why it is important now that central government doesn’t predetermine choices by releasing private companies from the accountability required in the public realm, or by cutting off better and cheaper options. We need to be aware of the ‘system effects’ that some sorts of private sector involvement may create. PFI building of schools and hospitals, for example, may limit the scope for multiple use of buildings, for extended schools or co-locating services. Splitting up services into different private sector products may add to costs as each supplier makes their profit, as we have seen with the high rentals for rolling stock in the rail network. Choice-based systems that require surplus capacity may, when resources become scarce, force tragic rationing systems ‘up the line’. Foundation hospitals may be a good solution to the hospital problem, but their need to expand as businesses may drive them to take over primary care – which may not be the best solution for service users.

Deliverers of public services, public or private, need to be encouraged to engage as equal partners, offering help, sharing risk, sharing values and objectives. New delivery organisations – voluntary sector, third sector, not-for-profit, social businesses, private companies with social goals – should be encouraged, and at least offered a level playing field. Government, national, regional and local has an active role in shaping and making markets, since markets are never ‘pure’ where public subsidy is concerned, and strong governance powers to do so are a vital way of ensuring that services meet public needs.

We need to value public services, not simply because they meet consumer needs, but because they offer something outside the consumer experience. We need to develop collectivist habits because they contribute to our health and well-being. A resilient, self-confident social democracy has a public realm in which market values and market relationships don’t apply. As our lives become increasingly dominated by capitalist relationships and commodification, the public realm takes back social space in which we learn to share, to work and act together, to protect the weak, and to act as guardians of our social wealth for future generations. Public parks, public libraries, schools and swimming pools are some of the few social spaces where people from all social classes can come together – where people are not defined, segmented and targeted based on age or income. The relentless concern to modernise must not simply reflect current consumer preferences – young people brought up as ‘über-consumers’ may not choose collective solutions now – but the government is fighting with every authoritarian weapon it can against the social consequences of a shrinking and impoverished public realm. While institutions need to be modernised, collectivist values cannot simply be dismissed as old fashioned. Once we have lost them, we will never get them back again.

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About the authors

Sue Goss is a freelance writer, consultant and executive coach, specialising in leadership development and collaborative working. She is an associate of Traverse, formerly the Office of Public Management, and of the Leadership Centre.